Value Investors Tribe

Charlie Munger, whom Warren Buffett honored as the architect of Berkshire Hathaway in his 2024 annual letter to shareholders has been asked, in one form or another, at various instances about how to be successful. Charlie Munger has shared multiple personality traits and characteristics necessary to be successful and one of his most believed principle is that of constant learning.

In his commencement speech at University of Southern California Charlie spoke about the phenomenal performance of Berkshire Hathaway and said “Without Warren Buffett being a learning machine, constant learning machine, the record would have been absolutely impossible. The same is true at lower walks of life. I constantly see people rise in life who are not the smartest, sometimes not even the most diligent. But, they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that habit help, particularly when you have a long run ahead of you.”

Reading between the line helps and in this particular case Charlie not only emphasizes importance of constant learning but also explains how it compounds over a long period of time. Constant learning, constant development, constant growth compounds over time and that helps you get ahead of your peers significantly. Small development in the knowledge over a longer periods of time is what gets you ahead and makes you successful.

This can be witnessed in the case of Warren Buffett himself. Warren was focused on Grahamian approach to investing early in his career and his purchase of See’s Candies was totally different from what he had done historically. However, it worked wonders for Berkshire Hathaway and it would not have been possible without his constant learning mindset. In his 2007 letter to shareholders, Warren Buffett mentioned that they paid $25 million for See’s Candies when its pre-tax earnings were $5 million. In 2006, See’s pre-tax earnings were $82 million i.e. over 16-fold increase!

Warren has been reading for over 5 hours a day since he was a teenager and possibly before that too. This compounding of knowledge has made him the most successful investor globally considering longevity of his career. This mental model practiced by Warren Buffett and late Charlie Munger can help us be more knowledgeable, more successful and possible more wealthy!

Key Takeaways:

1. Constant learning helps us get ahead of our peers, especially when practiced over long periods of time. Start it sooner rather than later, let the compounding begin!
2. If the legends like Warren Buffett and late Charlie Munger needed to constantly update their knowledge base to be successful, we’ve got no way around it!
3. What’s something new that you’ve learned in recent past? Keep track of things you learned over a month, a year and so on.